What’s an unsecured personal loan?
In contrast to a secured loan, an unsecured loan is a personal loan that is not guaranteed by any asset or collateral. Collateral is an item of value that acts as security for the lender extending credit. If the borrower defaults, the lender can take the collateral and resell it to recover at least part of the amount of the loan. It also makes the borrower more likely to pay the loan back since he does not want to lose his property.
No collateral means increased risk for the lender. This is why unsecured loans usually have higher interest rates. The only way to get an unsecured loan with a low interest rate is to have a very high credit score. If you score is bad to average, the lender assumes he is taking a bigger risk by providing you a loan.
Network of Willing Lenders – 500 Credit Score Personal Loans
The good news is we have assembled a large network of lenders who are willing to take that risk on your behalf. We’ve also made it easy for you to submit your information to them quickly. In fact, with just one simple application – that takes less than two minutes to complete – you can get in front of all of them. No driving around the city, from bank to bank, filling out dozens of applications. Read more about 500 credit score personal loan options.
All you have to do is complete the secure online application and start receiving loan approvals in your inbox – sometimes in only minutes. And be ready for more than one loan approval. Here’s why. Our loan-matching process forces lenders to compete for your business, which is great for you. It ensures you will get the lenders best offers.
Review and Select
After you receive your loan approvals, review them carefully, and then choose the one that has the best rate and terms. Also, pay close attention to the details, including the length of the repayment period and things such as late or added fees. If you have questions, ask your lender for clarification.
Different Types of Unsecured Loans
Primarily, there are two types of unsecured loans. Those based on your credit score, which has to be good to excellent. The other kind is based on having a stable job and steady paycheck.
Credit-based unsecured loans have lower interest rates and longer repayment periods, usually 12 to 24 months. Paycheck-based unsecured loans typically have higher rates and shorter repayment terms, from two weeks to several months.
Advantages of an Unsecured Loan
Now that you understand how unsecured loans work, you should ask yourself a few questions.
- Do you have or want to attach collateral to the loan?
Keep in mind a secured loan may cost less, but you do risk your property if you fail to make payments as agreed.
- Do you have a high enough credit score to get an unsecured loan?
You’ll likely need a score in the high 600’s to receive an approval for a credit-based, low interest loan.
- Do you have a job, consistent paycheck and bank account?
If so, you should have no problem getting a paycheck-based unsecured loan.
3 Tips Every Borrower Should Follow:
Do your research online and learn how to save
As compared to secured loans, there will be lesser room for negotiation with unsecured loans but that does not mean you shouldn’t try to negotiate at all. Another way to secure an optimal rate is to do thorough research, compare your options, and try to find a lender who will offer the lowest rate and most favorable loan terms.
Understand the agreement and its implications
Given the complexity of loan agreements and the implications it could have on your financial standing for years to come, do take the time out to read and understand the agreement thoroughly.
If you feel the need for extra help, do not hesitate to consult a qualified attorney or legal professional who can help you understand the fine print thoroughly. It may be a good idea to ask your legal professional for help with negotiating terms as well.
Make sure you make payments on time it’s that important
Making payments on time not only helps you maintain a good credit standing, it also saves you valuable resources that would otherwise be lost in the form of late payment fees and other late payment penalties.
Overall, an unsecured loan is a faster and easiest way to obtain a personal loan. Add to that the fact, that there are often minimal documentation requirements considering the absence of collateral requirement.